State-run oil firms spent one trillion rupees last fiscal

PM Modi's goal of reducing dependence on oil imports by 2022 will be the major driving factor for the government's expenditure in the coming two years.

Collectively, 11 state-owned companies have spent more than one trillion rupees ($16 billion) in last fiscal. This spending of a near three-year high will be sustained by India's state-owned oil companies, thanks to falling oil-services costs and expanding demand for oil.

Indian Oil, India's largest oil refiner will increase domestic spending by 25% this fiscal, while Hindustan Petroleum aims to invest about 17% more.

Oil and Natural Gas Corp., the biggest explorer and top spender in the country, has no plans to up its investment this year, keeping it same as last year.

"Spending by Indian oil companies has further upside over the coming years because of opportunities at home and abroad," said Abhishek Kumar, senior energy analyst at Interfax Energy's Global Gas Analytics in London. "Low services costs make spending more attractive now."

India has been showing a continuously growing appetite for energy, driven by PM Modi's goal of reducing oil dependence on imports by 10% by 2022.

Another factor that could cited to be the reason of higher capital expenditures at Indian refineries is the country's decision to upgrade its fuel quality and lower emissions to equal Euro 6 standards by 2020, said Bhaskar Patel, managing director at Technip India, a unit of TechnipFMC Group.